CAT® DEALER IMPLEMENTS

DEFINED MINING
MAINTENANCE AND REPAIR
PROCESSES
Managing equipment is a necessary component of doing business that takes mining companies
away from their core competencies—extracting and processing materials. While equipment
management may be time-consuming, costly and complex, it also offers mine sites a number of
improvement opportunities that can have a significant impact on their bottom line.

Over the years, Caterpillar Inc. has recognized the benefits that can be realized by improving the
way Maintenance & Repair (M&R) activities are performed. As early as the 1990s, the heavy
equipment manufacturer began developing a maintenance model for mining mobile equipment, and
in 2006 formally adopted a set of 10 distinct processes and routines that enable a proactive
maintenance support system. The majority of Cat® dealers make many of these processes a key
part of their maintenance activities for mining customers, and encourage customers that do their own
maintenance to embrace them as well.

In 2012, Cat dealer PT Trakindo Utama began a substantial undertaking to incorporate all 10 of the
defined M&R processes in an effort to support and standardize its maintenance operations within
Indonesia. Two years later, after a significant investment in time and people and a pilot
implementation on an actual customer site, Trakindo became the first Cat dealer in the world to
implement the full set of the recommended processes.

The achievement earned the dealer accolades and recognition from Caterpillar for its effort and
commitment. But the true beneficiaries of the M&R processes are Trakindo’s customers, who will
reap the rewards of improved maintenance and repair services with increased machine availability,
faster turnaround time, improved fleet performance—and lower costs overall.

DEFINING A PROACTIVE MINING MAINTENANCE SYSTEM

Today’s mining companies are focused on meeting their production goals efficiently and at the
lowest possible costs. And the companies that support them—like Caterpillar and Cat dealers—are
continually searching for ways to help them achieve these demanding goals.

Equipment plays a primary role, and the ability of machines to perform according to their
specifications relies on three major factors—maintenance, design and application. Each of these
three areas has to be considered and managed effectively to optimize equipment productivity.
“The primary goal of the maintenance organization is to make sure machines keep doing what
they’re designed to do, in the application where they’re operating, for their entire productive life
cycle,” says Tim Siekmann, a product support manager for Caterpillar’s Global Mining organization.
“There are a number of routines and processes that must be followed to make sure that happens,
and by following them we can help minimize equipment downtime and the production losses that
come with it.”

A machine’s productive life cycle is determined by the life of its major components. The end and
beginning of each new cycle are marked by the Planned Component Replacement (PCR) event.
Inside these multiple cycles, the equipment will require distinctive maintenance activities that are
either predictive, preventive or corrective.

“Every one of these maintenance events must be managed and executed efficiently, triggering all
the necessary processes,” says Abelardo Flores, a Caterpillar senior market professional. “The goal
is always to repair before failure, so we can maximize availability at the lowest cost.”

With access to the maintenance organizations of mines around the world through its Cat dealer
network, Caterpillar was able to study them and build a solid understanding of processes and
techniques that are effective, as well as those that should be corrected or avoided.

“We learned a lot about processes and the resources required for an effective maintenance
organization,” recalls Sean Gladieux, a product support manager for Caterpillar’s Global Mining
organization. “But we also realized the importance of partnership. A combined commitment from the
mining customer, from Caterpillar as their equipment manufacturer, and from their dealer as a
support partner, is the key to success.”

This experience and understanding led to the development of a Proactive Maintenance Support
System—a maintenance model in which the condition and application of the equipment are being
constantly monitored to detect and schedule needed repairs before failures occur. Key to the model
are 10 defined processes organized around five principal steps:

1. Detect machine defects

2. Plan repairs before failure
3. Execute the repairs
4. Evaluate process performance
5. Correct through continuous improvement
“These five principle steps reinforce the main concept of condition-based maintenance and the
search for ways to continually improve based on the results and performance we’re measuring,”
says Gladieux. “While adherence to the defined processes is important, we also left room for new
approaches and techniques that contribute to successful results.”
Trakindo maintenance shop

OUTLINING THE 10 PROCESSES

A maintenance system is made up of many functions that co-exist and interact with each other. The
10 processes developed by Caterpillar were designed to define the functions of an effective
maintenance system, not the organization itself.

“No matter how your maintenance organization is structured, you have to make sure that the key
functions are present,” says Gladieux, “These functions will ultimately determine the roles and
responsibilities that any organization will have to consider in the process of structuring its on-site and
off-site support.”

1. Preventive Maintenance

High-frequency, fixed-interval, planned activities that include well-defined service routines, proactive
defect detection and repair execution.

Preventive maintenance activities provide a good and steady platform to execute and control the
basic maintenance tasks, and also provide maintenance teams an opportunity to accomplish minor
repairs at the same time. Each of the activities must be fully planned by defining the activities,
procedures, personnel, time, tools, parts and consumables required.

2. Condition Monitoring

Timely and accurate detection of changes in equipment health, operation and application severity in
support of a repair-before-failure maintenance strategy.

The goal of Condition Monitoring (CM) is the early detection of any potential failures or abnormal
conditions. But the real benefit of CM is realized when those detections are quickly turned into
actionable recommendations that allow the scheduling of repairs to address them.

“At world-class mines, there are often many different kinds of machine inspection and condition
monitoring routines and disciplines,” says Gladieux. “These routines complement one another, and
each one provides part of the total picture of the machine condition.”
These routines include:

1. Equipment Inspections
2. Fluid Management/Analysis
3. Machine Electronic Data
4. Application Severity
5. Machine Repair History

3. Backlog Management

A planning function designed to effectively manage the pending to-do list via scheduled repairs or
corrections before failure.

Backlog is the work that has not been completed by the nominated “required-by” date. Backlogs are
also managed as pending workload for the repair centers. Caterpillar’s approach to Backlog
Management is to view it as a powerful tool to proactively prevent failures.

“We like to say that if your machine has a defect that needs to be corrected, you are already late,”
says Flores “That defect is indeed a backlog.”

4. Planning & Scheduling

The “brain” of the maintenance operation. It plays a critical role in achieving a target of 80 percent
scheduled events.

A repair-before-failure philosophy and achievement of a high percentage of planned and scheduled

repairs should be the foundation of the overall repair strategy. The Planning & Scheduling function
plays a critical role in the achievement of these goals. During this process, the maintenance
organization defines and gathers necessary fleet equipment information, transforms it into clear and
effective plans and activities, schedules their execution and controls the results.

“During this process, we determine what to do, how to do it and when to do it,” says Flores. “To be
effective, we need to identify any special resources or parts that will be needed, understand the
labor required, and make sure we will have the shop space to complete the activities. Then we pass
this information on to the scheduling team to coordinate facilities and select the best execution
dates.”

5. Parts Management

An essential logistical function that will help ensure the right part, in the right quantity, is in the right
place at the right time.

A maintenance team that has the parts and components necessary at all times is the ideal scenario,
and achieving this goal requires strong and clear communications between the parts and
maintenance departments. An accurate and complete demand history and a well-supported forecast
of future needs will enable the parts team to successfully define, implement and maintain the correct
on-site parts support.

The role of the parts organization goes well beyond simply ordering parts. An optimized parts
department is responsible for managing the parts supply channel, hiring specialized labor, ensuring
the right support tools are in place, maintaining facilities, and managing an inventory of parts,
components, consumables and tools.

“The on-site storage of parts and components is a challenge,” says Siekmann, “These items are
expensive and must be properly stored to ensure they are in perfect condition when needed.”

6. Component Management

A combination of many activities necessary to successfully manage components and achieve their
expected lives, which is critical to meeting the desired cost per ton.

There are dozens of major activities that make up the component management process, which
begins by defining the component life goals; a component repair, rebuild, replace strategy; and
inventory. Activities include component tracking, contamination control, CM, PCR forecasts,
inspections, transportation and storage, and planning and scheduling. A successful component
management process relies on close communication, accurate data and performance evaluations
through all steps of the process.

“While all repairs are important and affect equipment availability, those that affect components have
the greatest effect on operational costs,” says Flores. “Components are key cost drivers. That’s why
we made component management a separate process. It’s very important.”

7. Repair Management

The organization and management of the resources necessary to perform efficient and effective
repairs.

Once the repair and maintenance activities have been determined—whether scheduled or
unscheduled—resources must be allocated and prepared to complete the work. There are two
distinct service areas to be considered: the shop and the field. Because of the nature of the services
performed in these two areas, effective mine-site maintenance organizations recognize the need to
establish the support in the same way, developing and assigning specialized crews and equipment
to each of them.

Field service is the first line of support. This organization is responsible for responding to
unscheduled calls, quickly diagnosing and making a repair decision, and defining the course of
action. This team also serves as the eyes and ears in the field—observing application and
operations and reporting performance.

The shop is dedicated to scheduled repairs, such as preventive maintenance activities and PCRs, as
well as unscheduled repairs that cannot be performed in the field because of their duration,
resources and contamination control concerns. The shop is also responsible for coordination of other
on-site repair centers, such as tires and welding.
“We also can’t forget the importance of enabling our people with the appropriate tools and facilities
to get the results we need,” says Gladieux.

8. Human Resources/Training

A defined list of activities that ensure that the maintenance organization successfully manages its
most important asset—its people.

Each person in the maintenance organization brings a set of values, personal goals and
competencies that will depend on their past experience and education. Successful organizations
take an inventory of these skills and assign the correct person to the appropriate function or role in
the organization. Other considerations of this process include recruiting, outsourcing, career
management (including skills assessment and training needs), labor management, benefits and
compensation, retention and succession, and regulations compliance.

“Having the right number of people, with the right skills, is the key to any successful maintenance
organization,” says Flores. “They must be organized effectively to execute their jobs, and they must
share a common goal.”

9. Performance Evaluation

The gathering of relevant data, and then transforming that data into information that can be used to
manage performance.

Effective maintenance management requires measuring performance, comparing results with targets
and goals, discovering those areas that are substandard and focusing on activities to improve or
correct them, and ensuring sustainability of the gains already obtained.

During this process, the maintenance organization must identify goals; define the Key Performance
Indicators (KPIs) that will be used to measure performance; design and implement the data
collection process; gather information; calculate, analyze and report results; and finally, identify the
corrections that will be necessary to manage them.

“We specifically included performance evaluation as one of our recommended processes to

encourage the disciplined analysis of the information gathered by the on-site maintenance
organization,” says Flores. “You can’t successfully manage your operation without solid information
and meaningful metrics.”

10. Continuous Improvement

The logical final function in the M&R Process, involving the entire organization in the search for
solutions.

After measuring and detecting problems or areas of opportunity, a formalized approach is necessary
to guide the organization and keep the team on track and focused on these areas. There are many
Continuous Improvement (CI) methodologies or models available from which to choose, adopt and
adapt to specific site characteristics. Caterpillar follows the 6 Sigma approach to identify the root
causes of problems and identify possible improvements. The major steps in any CI process include:
 Identify opportunities
 Determine the impact and prioritize
 Assign projects
 Define the problem, scope and outcomes
 Conduct meetings to measure, analyze and document
 Present a solution to the process owners
 Implement
 Follow up (measure, analyze, document)
 Validate the solution or recycle back to the CI team
 Communicate results
“Continuous Improvement is a never-ending effort, not a one-time solution for all problems,” Flores
stresses. “It’s a long journey that we have to keep alive as long as our maintenance organization
exists.”

PUTTING THE PROCESSES IN ACTION

Cat dealer Trakindo’s journey to the successful implementation of all 10 M&R practices began nearly
a decade ago, when the dealership was introduced to what was available from Caterpillar in terms of
M&R support. While attending training and learning more about the processes, the dealer team
realized the importance of implementing these activities for its customers in Indonesia, where
Trakindo has responsibility for supporting equipment at multiple mining projects.

“The mining business in Indonesia has always been challenging. Providing consistent, world-class
product support has been one of the most critical ways we can support our customers,” says John
Noreiks, head of Trakindo’s Product Support Division. “Our journey to succeed at Equipment
Management has had its highs and lows since our first Maintenance and Repair Contract (MARC) in
the mid-1990s in the jungles of Kalimantan, but we strive for a continuous improvement culture that
helps us progress our performance.”

The growth of mining over the years has challenged Trakindo specifically in the area of people skills.
“The M&R disciplines presented us with an opportunity to further progress our ability to achieve
consistent world-class performance year after year with our predominately Indonesian workforce.”

Trakindo agreed to pilot the M&R project in partnership with Caterpillar to better meet the needs of
its customer Newmont Mining Corporation, at its Batu Hijau site in Indonesia. Batu Hijau, operated
by Newmont subsidiary PT Newmont Nusa Tenggara (PTNNT), is a large open-pit mine located in
the southwest region of the island of Sumbawa in Indonesia. The mine ore deposit contains primarily
copper with gold and silver in a minor content scale.

PTNNT operates a large fleet of Cat equipment: 111 793C and 793D haul trucks, two 994F Wheel
Loaders, 11 Dozers (four D10Ts and seven D11Rs), four 854G Wheel Dozers, three 24M Motor
Graders, and three 390D Hydraulic Excavators.
This large fleet is primarily maintained by Trakindo under a Maintenance and Repair Contract
(MARC). Trakindo considers itself a partner with Newmont, not only because of the contractual
obligations outlined in the MARC, but also in the success and sustainability of the Batu Hijau
operation. To help in this effort, Trakindo began an initiative to implement defined maintenance and
repair processes that will help sustain the gains on site, prepare the organization for future
challenges, and deploy the process standardization region-wide. Flores served as the project leader
from the Caterpillar Global Mining organization.

“While meeting the terms of the MARC is important, what we really focus on is giving that specific
site what they need to succeed,” says Flores. “At Batu Hijau, they were looking to increase the
physical availability of their machines—having equipment available to meet their production goals,
and increasing their utilization.”

Mick Turner, who was on the on-site technical support manager at Batu Hijau during the process
implementation, explains that the site had a goal of no more than 10 percent equipment downtime.
“Trakindo accepted the challenge to deliver that goal, providing a reliable fleet of mining equipment
that would enable the site to achieve production goals at the lowest cost per tonne,” he says.

Machine availability at Batu Hijau was at 86 percent, says Flores, with a goal of moving that up to
the 90 percent benchmark. Newmont began an improvement initiative to achieve this goal in
partnership with Trakindo. The initiative began in 2010, when experts from Caterpillar Global Mining
completed an assessment of the maintenance organization’s performance at Batu Hijau.

“We identified that the maintenance model required some attention to ensure peak performance was
being delivered and that it would be sustainable,” recalls Turner. “Caterpillar subject matter experts
completed a detailed review, along with representatives from Trakindo. As a result, a project charter
was developed, goals were set, and process owners were identified and trained.”

The initial assessment identified a number of “quick wins” that could be easily implemented to start
getting availability headed in the right direction. “These activities showed a direct positive impact on
the physical availability of the 793 fleet and served as a turning point in the effort to prove that the
M&R processes had great potential for Batu Hijau,” says Flores.

The first attempt at implementing the M&R processes began in January 2011, but the outcome was
not progressing well by Caterpillar Global Mining standards. “The effort and commitment were
there,” recalls Flores. “But an additional study at another mine site identified performance gaps and
confirmed that additional training was necessary to improve the M&R processes within the Trakindo
organization.” Trakindo officially re-launched the M&R Implementation Project at Batu Hijau in
Janary 2012, with support from the equipment management team from the dealer’s headquarters in
Jakarta, Indonesia. Caterpillar Global Mining experts also supported the re-launch.

“We worked alongside Trakindo to provide training and help develop the necessary skills,” says
Flores. “We developed a baseline for their performance and did regular reviews and validation based
on that assessment.”

The four core processes—Preventive Maintenance, Condition Monitoring, Backlog Management and
Planning & Scheduling—were successfully implemented from May 2012-May 2013, and the
remaining six were implemented and successfully validated in May 2014.
MAKING AN INVESTMENT
The Trakindo initiative at Batu Hijau proved that it is possible for a maintenance organization to
successfully implement all 10 of the Caterpillar M&R processes. But it also proved that it is not an
easy endeavor.

“It requires a lot of training, focus and investment from everyone involved,” says Flores. “The project
at Batu Hijau required a long-term commitment from Trakindo and Caterpillar Global Mining, as well
as the patience and support of the people at the mine site.”

Trakindo dedicated 10 people from its Jakarta headquarters equipment management readiness
team to join the 50 people already working on the implementation in Sumbawa, as well as provided
project leaders at Jakarta and on site. The dealership estimates more than 115,000 man-hours were
invested in the project. Caterpillar provided an on-site performance engineer as well as a Caterpillar
Global Mining Subject Matter Expert (SME) for a total commitment of nearly 5,000 man-hours.
These man-hours combined are the equivalent of 25 full-time employees dedicated to the project for
its 2½ year duration.

TRANSFORMING THE MAINTENANCE ORGANIZATION

After identifying the gaps in its performance of the processes in 2011, the Trakindo team in
Sumbawa has transformed its maintenance organization in just a few short years. The team made
remarkable improvements in its baseline scores to achieve and exceed its process conformance
score of 85 percent in all 10 M&R processes, becoming the first Cat mining dealer to accomplish this
task.

Many of the team’s most significant changes were seen in the four core processes. Preventive
Maintenance performance went from a baseline of 45 to a final score of 85. Condition Monitoring
improved from 50 to 87, Backlog Management from 42 to 85, and Planning & Scheduling from 40 to
88. Trakindo’s biggest improvement was in Performance Evaluation, which soared from a baseline
of 35 to a final score of 85. The dealer’s highest score was in the Parts Management area, which
improved from a baseline of 70 to a final score of 94.

“Implementation of the processes and making the changes necessary to succeed has provided
Trakindo with many benefits,” says Noreiks. “The dealership now has a team of well-trained
technicians, a premier equipment management organization, and the tools and systems necessary
to succeed not only at Batu Hijau but on any mine site. The processes are scalable to meet our
customers’ specific requirements. We are also now taking these disciplines to customers in other
industries.”

DELIVERING RESULTS TO THE MINE SITE

At Batu Hijau, the results of Trakindo’s massive process implementation effort are being seen
directly in the performance of its equipment fleet. Since March 2014, physical availability of
machines has been consistently at 90 percent, a remarkable achievement considering that most of
the site’s haul trucks have exceeded 100,000 hours of operation.
By using the KPIs identified by the customer site—such as Physical Availability, Mean Time
Between Shutdowns and Mean Time to Repair — Trakindo is able to measure performance and
continue to ensure it is meeting the targets.

At one point, asset utilization began to fall below targets, but thanks to its new adherence to the
processes, Trakindo was able to quickly remedy the situation. “Trakindo’s on-site organization is not
only capable of maintaining the fleet and obtaining world-class KPIs, but it also has the tools to apply
when needed to recover from a difficult situation,” Flores says.

“Passion, discipline and a full commitment from the whole team are the key success factors in
achieving the certification,” says Marsy Marsiyah, Trakindo site project leader. “We are committed to
advancing the customer forward, and recognize that sustainability of this process implementation is
crucial.”

“Newmont is really seeing the benefits of this initiative,” says Flores. “They’re impressed by how far
Trakindo has come and are excited about the additional results they will see in the future—not just at
this site, but at others.”

In fact, Turner, who was one of the leaders of the maintenance organization at Batu Hijau, has now
begun working at Newmont’s Boddington gold mine in Australia and has asked the Cat dealer there
to begin a similar continuous improvement project to allow Boddington to enjoy the same type of
results.

“Sustainable results have and continue to be delivered at Batu Hijau, to a point where they are now
considered best in class,” says Turner. “The key driver to these results was the fact that Newmont,
Trakindo and Caterpillar worked together as one team. These trustworthy and enduring relationships
played an important role in ensuring key milestones were delivered.”

Since joining Newmont Boddington Gold, Turner has begun working with Caterpillar and local Cat
dealer WesTrac team to look for ways to improve M&R performance on site. Five of the 10 M&R
processes were assessed and the team has been working together to implement quick wins.

“Having experienced the positive contribution the M&R processes have made, I would encourage all
maintenance organizations to consider replicating the program,” says Turner. “It’s all about being
better today than we were yesterday—and even better tomorrow.”

EARNING RECOGNITION
As a result of it efforts at Batu Hijau, Trakindo earned special recognition from the Caterpillar Global
Mining organization. “This is a very significant achievement,” says Ruediger R. Kaub, a Caterpillar
Global Mining regional manager in Southeast Asia and Japan. “Trakindo worked extremely hard for
this achievement and proved it can be done. We are proud to have them represent Caterpillar.”

This achievement is also an example of how mining operations and equipment management
organizations around the world can share information and learn from one another to positively
impact their operations — and their profitability.
“Caterpillar has always gathered and shared best practices from its customers and dealers around
the world,” says Gladieux. “We know that standardizing processes, like we have done with
equipment management, is critical. We succeed when we establish a common foundation,
incorporate and share best practices, measure with the same KPIs, and join efforts in a well-
structured environment of continuous improvement.”